Correlation Between SBA Communications and Ecopetrol
Can any of the company-specific risk be diversified away by investing in both SBA Communications and Ecopetrol at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining SBA Communications and Ecopetrol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBA Communications Corp and Ecopetrol SA, you can compare the effects of market volatilities on SBA Communications and Ecopetrol and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in SBA Communications with a short position of Ecopetrol. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBA Communications and Ecopetrol.
Diversification Opportunities for SBA Communications and Ecopetrol
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SBA and Ecopetrol is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding SBA Communications Corp and Ecopetrol SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecopetrol SA and SBA Communications is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on SBA Communications Corp are associated (or correlated) with Ecopetrol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecopetrol SA has no effect on the direction of SBA Communications i.e., SBA Communications and Ecopetrol go up and down completely randomly.
Pair Corralation between SBA Communications and Ecopetrol
Assuming the 90 days trading horizon SBA Communications is expected to generate 3.97 times less return on investment than Ecopetrol. But when comparing it to its historical volatility, SBA Communications Corp is 1.22 times less risky than Ecopetrol. It trades about 0.1 of its potential returns per unit of risk. Ecopetrol SA is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 740.00 in Ecopetrol SA on October 20, 2024 and sell it today you would earn a total of 82.00 from holding Ecopetrol SA or generate 11.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBA Communications Corp vs. Ecopetrol SA
Performance |
| Timeline |
| SBA Communications Corp |
| Ecopetrol SA |
SBA Communications and Ecopetrol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBA Communications and Ecopetrol
The main advantage of trading using opposite SBA Communications and Ecopetrol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBA Communications position performs unexpectedly, Ecopetrol can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ecopetrol will offset losses from the drop in Ecopetrol's long position.| SBA Communications vs. ARDAGH METAL PACDL 0001 | SBA Communications vs. Gaming and Leisure | SBA Communications vs. Playa Hotels Resorts | SBA Communications vs. Playtech plc |
| Ecopetrol vs. Molson Coors Beverage | Ecopetrol vs. Taiwan Semiconductor Manufacturing | Ecopetrol vs. MOLSON RS BEVERAGE | Ecopetrol vs. Suntory Beverage Food |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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